February 2009 - Making a claim for breach of contract


Business Law Update
February 2009

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from Cousins Business Law

Gary CousinsWelcome to the February issue of the Business Law Update from Cousins Business Law. This month there’s advice on how to tackle a claim for breach of contract, a reminder for directors on their duties and a guide on saving money on premises during the downturn.

I hope you will find information relevant to your business in this month’s issue. We are keen to cover topics of concern to business people so, if you have questions or topics you would like us to cover, email your ideas to marketing@business-lawfirm.co.uk.


Gary Cousins
0121 778 3212

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Making a claim for breach of contract

You’ve received a letter accusing you of being in breach of contract or maybe you want to make a claim. What should you do?

Step 1 – Get the contract documents together

The first step in a contract claim is ascertaining exactly what the contract was.

The contract may be a formal written contract but often it consist of a combination of orders, letters, terms & conditions, emails, phone calls, meeting notes and so on. The documents that are important are generally those that were made before the project started.

It is often difficult to work out exactly what documents form ‘the contract’ or even amount to evidence of what was agreed orally. Many documents should be ignored for these purposes. Also, some contractual terms, even if written in the contract, might be of no legal effect and others are implied into the contract even if they were not there at all! It is therefore essential to obtain legal advice once you have all the documents together.

The following are rough guidelines:

  1. Is there a written contract? If so, does it say that it is an entire agreement and/or that no party can rely on any representations made? If so, it might be that this document is the only one that can be considered to form the contract.

  2. Were there any standard terms and conditions – either yours or the other parties? They can be terms and agreements from previous dealings between the same parties. If so, then these may form part of the contract. However, many clauses excluding liability may be unenforceable in certain circumstances.

  3. Some terms form part of the contract even if they were never written down or discussed. These include clauses that any goods supplied will be of satisfactory quality, that services will be performed with reasonable care and skill and within a reasonable time or, sometimes, terms that a court simply considers necessary to allow the contract to work.

Step 2 – Ascertain what the breach of contract is

For there to be a breach of contract, one or more of the contractual terms must actually be breached. There is no breach if things simply did not go as one party expected – there must be an actual breach of one of the contractual terms.

Make a note of what the breaches were, what was done to try to rectify things (if anything) and why that didn’t work out.

Step 3 – Damages

In breach of contract cases, damages are designed to put the injured party in the same position they would have been had the contract been performed properly as far as possible. They are not designed in English law to punish the offending party and usually they do not amount to full compensation. If you are the victim of a breach of contract, it is likely that you will not be fully compensated but certainly, by taking action, you can obtain damages that will go a long way towards undoing some of the losses suffered.

Damages can include:

  1. loss of profits (if these can be ascertained);
  2. costs and expenditure wasted because of the breach;
  3. the costs of putting things right;
  4. consequential losses, especially if these were mentioned before the contract was formed or would be a reasonable consequence of the breach.

Make a list of all the losses you incurred in each of the above scenarios. Attach to them, all the documents that support your figures. Then take legal advice on what you can actually claim in your case.


Breach of contract cases are usually very complex legally, especially as to what the contract actually is and what damages you can obtain in any particular case. The courts may also penalise the innocent party if it did not take reasonable steps to minimise its losses and, in some cases, may order the guilty party to perform the contract.

Our advice is to put get your paperwork together as soon as possible and then to take legal advice.

Legal Update

Directors urged to take care as recession deepens

Directors’ duties and directors’ responsibilities are coming to the fore as this recession deepens. As the economy falls into an ever-deepening recession, directors of companies that are insolvent or could become insolvent need to consider their position as soon as possible in order to try to avoid being made personally liable.

Many directors think that, if they are trading through a limited company, their personal finances are safe (save for any personal guarantees they have given, usually to the bank).

However, this is not the case if a company becomes insolvent – defined as the liabilities of the company exceeding its assets, or not being able to pay its debts as they fall due.

For more details read our article Directors responsibilities in times of financial trouble.

For detailed advice book a free initial appointment with Gary Cousins on the Cousins Business Law website.

Plain English Legal Advice

Save money on business premises

Premises are one of a business’ biggest overheads and it makes sense during the current downturn to see what steps you can take to reduce your premises costs.

Steve Petty, commercial property solicitor with Cousins Business Law provides his top ten tips for reducing premises costs. Taken together you could reduce cash flow pressures as well as create a firm footing for securing property bargains in the future.

Read the Cousins Business Law top ten tips for reducing premises costs on our website.

Useful Links

Top tips for surviving the recession

The Daily Telegraph has published 9 tips for surviving the recession from business owners who have traded through previous recessions. Tips include negotiating deals in advertising, showing gritty determination and delivering excellent customer service. The tips were put together by mobile communications firm O2.

Counterfeit protection toolkit launched

Research from the UK- Intellectual Property Office (UK-IPO) revealed that nearly a quarter of small and medium-sized businesses have been affected by counterfeiting. In response the UK-IPO has launched a business toolkit to help firms protect themselves against counterfeit goods in their supply chains. The toolkit gives businesses advice on how to minimise the chances of being affected.

Litigation Madness

Upholding human rights?

In Austria, an animal rights group, VGT, asked the Supreme Court to make a declaration that a 26-year-old chimpanzee called Matthew Hiasl Pan was a person. The shelter where Matthew lived was about to be closed and VGT wanted to raise money under a scheme to re-house him, but only a person could benefit under this scheme.

VGT argued that, as chimpanzees’ DNA is 99.4% the same as human’s, he must be considered a person.

The court decided however that it could not consider the case as VGT had no authority to represent Matthew. If he was a person, the court held, he would have to represent himself unless he was mentally handicapped or in immediate danger and there was no evidence of either of these.

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Cousins Business Law is a member of the Law Society & regulated by the Solicitors Regulation Authority. Head Office: Swan House PO Box 11543, Birmingham, B13 0ZL. Tel +44 (0)121 778 3212. Fax: +44(0)121 275 6155